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Sep 16 - 11:55 AM

GBP/USD - COMMENT-Sterling's Pre-Fed Rise May Falter As Focus Returns To Brexit

By Paul Spirgel  —  Sep 16 - 10:35 AM

GBP/USD rose further away from its Sept.
11 low at 1.2763, hitting a six-day high at 1.2995 as the Fed meeting later on Wednesday stirred dollar longs to pare positions in case officials sound a dovish tone in the wake of last month's policy shift announcement.

The pound passed daily cloud top resistance at 1.2958, ignoring the recent resurgence in Brexit concerns associated with EU objections to the Internal Markets Bill, which threatens to break the existing withdrawal agreement.

While the Fed has stolen the spotlight, markets have largely priced in the policy pivot, especially since officials have all but ruled out negative rates.

U.S.
Eurodollar and fed fund futures have been pricing in a flat curve for the next three years 0#ED:, with UST 3-month/5-year spread near 11bps.

If sterling bulls get no help from the Fed in the form of new accommodation expectations, they may feel some pressure as traders re-focus on Brexit and dour UK inflation and growth.
For more click on FXBUZ


GBP Chart: Click here

UST 3m-5yr spread Chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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